The New York Times Company Reports 2016 Third-Quarter Results

NEW YORK--(BUSINESS WIRE)--
The New York Times Company (NYSE:NYT) announced today a third-quarter
2016 diluted earnings per share from continuing operations of $.00
compared with diluted earnings per share of $.06 in the same period of
2015. Adjusted diluted earnings per share from continuing operations
(defined below) were $.06 in the third quarter of 2016 compared with
$.09 in the third quarter of 2015.

Operating profit decreased to $9.0 million in the third quarter of 2016
from $21.9 million in the same period of 2015. The decline was driven by
severance expense associated with workforce reductions as well as lower
print advertising revenues and higher advertising and technology costs.
Adjusted operating profit (defined below) was $39.2 million in the third
quarter of 2016 compared with $47.6 million in the third quarter of
2015. The decline was driven by lower print advertising revenues and
higher costs, which were partially offset by higher circulation revenues.

“This quarter proved yet again that The New York Times has a very
compelling digital revenue story to tell,” said Mark Thompson, president
and chief executive officer, The New York Times Company. “We saw
exceptional gains in our digital consumer business, with a net increase
of 116,000 subscriptions to our news products, more than twice as many
as the same quarter last year and far more than any quarter since the
pay model launched in 2011.

“The gains are due in part to the extraordinary work of our newsroom
during an incredible news cycle, which has led to record audiences for
Times journalism and deep levels of engagement, as well as optimization
of our marketing activity and our investment in international.

“We had a strong quarter in digital advertising as well, returning to
growth in the quarter, 21 percent year-over-year. We saw solid
performances in virtual reality, video, branded content and programmatic
advertising.

“The quarter was also marked by real pressure on print advertising both
for us and for the rest of the industry. We expect print advertising to
remain challenged in the fourth quarter and while we will continue
innovating and investing where we think it makes sense, we will remain
focused on our cost structure and on rapidly growing our digital
business.”

Comparisons Unless otherwise noted, all comparisons are for
the third quarter of 2016 to the third quarter of 2015.

This release presents certain non-GAAP financial measures, including
diluted earnings per share from continuing operations excluding
severance, non-operating retirement costs and special items (or adjusted
diluted earnings per share from continuing operations); operating profit
before depreciation, amortization, severance, non-operating retirement
costs and special items (or adjusted operating profit); and operating
costs before depreciation, amortization, severance and non-operating
retirement costs (or adjusted operating costs). The exhibits include a
discussion of management’s reasons for the presentation of these
non-GAAP financial measures and reconciliations to the most comparable
GAAP financial measures, as well as an explanation of non-operating
retirement costs.

Third-quarter 2016 results included the following special items:

A $2.9 million ($1.8 million after tax or $.01 per share) charge in
connection with the streamlining of the Company’s international print
operations (consisting of severance costs).

A $5.0 million ($3.0 million after tax or $.02 per share) gain in
connection with an ongoing arbitration matter related to a
multiemployer pension plan.

There were no special items in the third quarter of 2015.

The Company had severance costs (in addition to those associated with
the streamlining of the Company’s international print operations) of
$13.0 million ($7.8 million after tax or $.05 per share) and $1.0
million ($0.6 million after tax or $0.00 per share) in the third
quarters of 2016 and 2015, respectively.

Results from Continuing Operations

Revenues Total revenues for the third quarter of 2016
decreased 1.0 percent to $363.5 million from $367.4 million in the third
quarter of 2015. Circulation revenues increased 3.0 percent, while
advertising revenues declined 7.7 percent and other revenues increased
1.0 percent.

Circulation revenues rose as revenues from the Company’s digital
subscription initiatives and the 2016 increase in home-delivery prices
at The New York Times newspaper more than offset a decline in print
copies sold. Circulation revenue from the Company’s digital-only
subscriptions (which includes news product and Crossword product
subscriptions) increased 16.4 percent compared with the third quarter of
2015, to $58.6 million. Circulation revenue from digital-only
subscriptions to our news products increased 15.4 percent to $56.1
million.

Paid digital-only subscriptions totaled approximately 1,557,000 as of
the end of the third quarter of 2016, a net increase of 129,000
subscriptions compared to the end of the second quarter of 2016 and a 30
percent increase compared to the end of the third quarter of 2015. Of
the 129,000 net additions, 116,000 net additions came from the Company’s
digital news products, while the remainder came from the Company’s
Crossword product.

Operating Costs Operating costs increased in the third
quarter of 2016 to $356.6 million compared with $345.5 million in the
third quarter of 2015, largely due to higher severance, advertising and
technology costs, which were partially offset by lower print production
and distribution costs as well as lower non-operating retirement costs.
Adjusted operating costs increased to $324.4 million from $319.8 million
in the third quarter of 2015 as savings in print production and
distribution were offset by higher costs in advertising and technology.

Non-operating retirement costs, which exclude special items, decreased
to $3.8 million from $9.4 million in the third quarter, driven by a
change in the methodology of calculating the discount rate applied to
retirement costs. The exhibits in this release include the detail of
non-operating retirement costs.

Raw materials costs were flat at $18.2 million compared with $18.4
million in the third quarter as price increases were offset by volume
declines.

Other Data

Interest Expense, net Interest expense, net was flat in the
third quarter of 2016 at $9.0 million compared with $9.1 million in the
third quarter of 2015.

Income Taxes The Company had income tax expense of $0.1
million in the third quarter of 2016 and $3.6 million in the third
quarter of 2015. The decrease in income tax expense is due to lower
income from continuing operations in the third quarter of 2016.

Liquidity As of September 25, 2016, the Company had cash
and marketable securities of approximately $944.9 million (excluding
restricted cash of approximately $24.9 million, the majority of which is
set aside to collateralize certain workers’ compensation obligations).
Total debt and capital lease obligations were approximately $434.9
million.

Capital Expenditures Capital expenditures totaled
approximately $6.0 million in the third quarter of 2016.

Outlook Total circulation revenues in the fourth quarter of
2016 are expected to increase at a rate similar to that of the third
quarter of 2016.

Total advertising revenues in the fourth quarter of 2016 are expected to
decrease at a rate similar to that of the third quarter of 2016.

Operating costs and adjusted operating costs are expected to increase in
the mid to high-single digits in the fourth quarter of 2016 compared
with the fourth quarter of 2015.

The Company expects the following on a pre-tax basis in 2016:

Depreciation and amortization: $60 million to $65 million,

Interest expense, net: $35 million to $40 million, and

Capital expenditures: approximately $30 million.

Conference Call Information The Company’s third-quarter
2016 earnings conference call will be held on Wednesday, November 2 at
11:00 a.m. E.T. To access the call, dial 877-201-0168 (in the U.S.) or
647-788-4901 (international callers). The passcode is 79354920. Online
listeners can link to the live webcast at investors.nytco.com.

An archive of the webcast will be available beginning about two hours
after the call at investors.nytco.com.
The archive will be available for approximately three months. An audio
replay will be available at 855-859-2056 (in the U.S.) and 404-537-3406
(international callers) beginning approximately two hours after the call
until 11:59 p.m. E.T. on Wednesday, November 16. The passcode is
79354920.

Except for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that
involve risks and uncertainties, and actual results could differ
materially from those predicted by such forward-looking statements.
These risks and uncertainties include changes in the business and
competitive environment in which the Company operates, the impact of
national and local conditions and developments in technology, each of
which could influence the levels (rate and volume) of the Company’s
circulation and advertising, the growth of its businesses and the
implementation of its strategic initiatives. They also include other
risks detailed from time to time in the Company’s publicly filed
documents, including the Company’s Annual Report on Form 10-K for the
year ended December 27, 2015. The Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.

The New York Times Company is a global media organization dedicated to
enhancing society by creating, collecting and distributing high-quality
news and information. The Company includes The New York Times, NYTimes.com
and related properties. It is known globally for excellence in its
journalism, and innovation in its print and digital storytelling and its
business model. Follow news about the company at @NYTimesComm or
investor news at @NYT_IR.

Exhibits:

Condensed Consolidated Statements of Operations

Footnotes

Reconciliation of Non-GAAP Information

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars and shares in thousands, except per share data)

Third Quarter

Nine Months

2016

2015

% Change

2016

2015

% Change

Revenues

Circulation (a)

$

217,099

$

210,705

3.0

%

$

654,573

$

636,626

2.8

%

Advertising(b)

124,898

135,356

-7.7

%

395,733

433,863

-8.8

%

Other(c)

21,550

21,343

1.0

%

65,386

64,040

2.1

%

Total revenues

363,547

367,404

-1.0

%

1,115,692

1,134,529

-1.7

%

Operating costs

Production costs

156,616

152,031

3.0

%

467,195

461,440

1.2

%

Selling, general and administrative costs

184,596

178,071

3.7

%

534,911

533,120

0.3

%

Depreciation and amortization

15,384

15,369

0.1

%

46,003

46,023

0.0

%

Total operating costs

356,596

345,471

3.2

%

1,048,109

1,040,583

0.7

%

Restructuring charge (d)

2,949

—

*

14,804

—

*

Multiemployer pension withdrawal (income)/ expense(e)

(4,971

)

—

*

6,730

4,697

43.3

%

Pension settlement charges(f)

—

—

*

—

40,329

*

Operating profit

8,973

21,933

-59.1

%

46,049

48,920

-5.9

%

Income/(loss) from joint ventures (g)

463

170

*

(41,845

)

(758

)

*

Interest expense, net

9,032

9,127

-1.0

%

26,955

31,095

-13.3

%

Income/(loss) from continuing operations before income taxes

404

12,976

-96.9

%

(22,751

)

17,067

*

Income tax expense/(benefit)

121

3,611

-96.6

%

(8,956

)

5,904

*

Net income/(loss)

283

9,365

-97.0

%

(13,795

)

11,163

*

Net loss attributable to the noncontrolling interest

123

50

*

5,719

390

*

Net income/(loss) attributable to The New York Times Company
common stockholders

$

406

$

9,415

-95.7

%

$

(8,076

)

$

11,553

*

Average number of common shares outstanding:

Basic

161,185

165,052

-2.3

%

161,092

165,130

-2.4

%

Diluted

162,945

166,981

-2.4

%

161,092

167,574

-3.9

%

Basic earnings/(loss) per share attributable to The New York
Times Company common stockholders

$

0.00

$

0.06

*

$

(0.05

)

$

0.07

*

Diluted earnings/(loss) per share attributable to The New York
Times Company common stockholders

$

0.00

$

0.06

*

$

(0.05

)

$

0.07

*

Dividends declared per share

$

0.08

$

0.04

*

$

0.12

$

0.12

*

* Represents a change equal to or in excess of 100% or not
meaningful.

See footnotes pages for additional information.

THE NEW YORK TIMES COMPANY

FOOTNOTES

(Amounts in thousands)

(a)

In the first quarter of 2016, the Company reclassified the
subscription revenue from its Crossword product, including prior
period information, into circulation revenues from other revenues.
The following tables summarize 2016 and 2015 digital-only
subscription revenues reflecting this reclassification:

2016

Third Quarter

% Change vs. 2015

Nine Months

% Change vs. 2015

Digital-only subscription revenues:

Digital-only news product subscription revenues

$

56,144

15.4

%

$

162,344

14.1

%

Digital Crossword product subscription revenues

2,408

47.7

%

6,778

53.2

%

Total digital-only subscription revenues

$

58,552

16.4

%

$

169,122

15.3

%

2015

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Full Year

Digital-only subscription revenues:

Digital-only news product subscription revenues

$

46,127

$

47,465

$

48,656

$

50,409

$

192,657

Digital Crossword product subscription revenues

1,323

1,470

1,630

1,863

6,286

Total digital-only subscription revenues

$

47,450

$

48,935

$

50,286

$

52,272

$

198,943

Consistent with this reclassification, the Company also adjusted the
number of digital-only subscriptions to include Crossword product
subscriptions. The following tables summarize 2016 and 2015
digital-only subscriptions:

2016

September 25, 2016

% Change vs. 2015

Digital-only subscriptions:

Digital-only news product subscriptions

1,332

28.0

%

Digital Crossword product subscriptions

225

41.5

%

Total digital-only subscriptions

1,557

29.8

%

2015

March 29, 2015

June 28, 2015

September 27, 2015

December 27, 2015

Digital-only subscriptions:

Digital-only news product subscriptions

957

990

1,041

1,094

Digital Crossword product subscriptions

142

145

159

176

Total digital-only subscriptions

1,099

1,135

1,200

1,270

THE NEW YORK TIMES COMPANY

FOOTNOTES

(Amounts in thousands)

(b)

The following table summarizes advertising revenues by category in
the third quarter and first nine months of 2016:

2016

Third Quarter

% Change vs. 2015

Nine Months

% Change vs. 2015

Display

$

110,889

-9.1

%

$

353,356

-10.3

%

Classified

6,941

-17.7

%

22,892

-12.1

%

Other advertising

7,068

41.7

%

19,485

39.8

%

Total advertising

$

124,898

-7.7

%

$

395,733

-8.8

%

(c)

Other revenues consist primarily of revenues from news
services/syndication, digital archives, rental income, NYT Live
business and e-commerce.

(d)

In the third and second quarters of 2016, the Company recorded
charges of $2.9 million and $11.9 million, respectively, in
connection with the streamlining of its international print
operations (primarily consisting of severance costs).

(e)

In the third quarter of 2016, the Company received $5.0 million in
connection with an ongoing arbitration matter related to a
multiemployer pension plan. In the second quarter of 2016, the
Company recorded an $11.7 million charge for a partial withdrawal
obligation under a multiemployer pension plan. In the first quarter
of 2015, the Company recorded a $4.7 million charge for a partial
withdrawal obligation under a multiemployer pension plan.

(f)

In the first quarter of 2015, the Company recorded pension
settlement charges of $40.3 million in connection with lump sum
payment offers to certain former employees.

(g)

In the first nine months of 2016, the Company recorded $43.5 million
loss from joint ventures, related to the announced closure of a
paper mill operated by Madison Paper Industries, in which the
Company has an investment through a subsidiary.

THE NEW YORK TIMES COMPANY

RECONCILIATION OF NON-GAAP INFORMATION

(Dollars in thousands, except per share data)

In this release, the Company has referred to non-GAAP financial
information with respect to diluted earnings per share from
continuing operations excluding severance, non-operating retirement
costs and special items (or adjusted diluted earnings per share from
continuing operations); operating profit before depreciation,
amortization, severance, non-operating retirement costs and special
items (or adjusted operating profit); and operating costs before
depreciation, amortization, severance and non-operating retirement
costs (or adjusted operating costs). The Company has included these
non-GAAP financial measures because management reviews them on a
regular basis and uses them to evaluate and manage the performance
of the Company’s operations. Management believes that, for the
reasons outlined below, these non-GAAP financial measures provide
useful information to investors as a supplement to reported diluted
earnings/(loss) per share from continuing operations, operating
profit/(loss) and operating costs. However, these measures should be
evaluated only in conjunction with the comparable GAAP financial
measures and should not be viewed as alternative or superior
measures of GAAP results.

Adjusted diluted earnings per share provides useful information in
evaluating the Company’s period-to-period performance because it
eliminates items that the Company does not consider to be indicative
of earnings from ongoing operating activities. Adjusted operating
profit is useful in evaluating the ongoing performance of the
Company’s business as it excludes the significant non-cash impact of
depreciation and amortization as well as items not indicative of
ongoing operating activities. Total operating costs include
depreciation, amortization, severance and non-operating retirement
costs. Total operating costs excluding these items provide investors
with helpful supplemental information on the Company’s underlying
operating costs that is used by management in its financial and
operational decision-making.

Management considers special items, which may include impairment
charges, pension settlement charges and other items that arise from
time to time, to be outside the ordinary course of our operations.
Management believes that excluding these items provides a better
understanding of the underlying trends in the Company’s operating
performance and allows more accurate comparisons of the Company’s
operating results to historical performance. In addition, management
excludes severance costs, which may fluctuate significantly from
quarter to quarter, because it believes these costs do not
necessarily reflect expected future operating costs and do not
contribute to a meaningful comparison of the Company’s operating
results to historical performance.

Non-operating retirement costs include interest cost, expected
return on plan assets and amortization of actuarial gains and loss
components of pension expense; interest cost and amortization of
actuarial gains and loss components of retiree medical expense; and
all expenses associated with multiemployer pension plan withdrawal
obligations. These non-operating retirement costs are primarily tied
to financial market performance and changes in market interest rates
and investment performance. Non-operating retirement costs do not
include service costs and amortization of prior service costs for
pension and retiree medical benefits, which management believes
reflect the ongoing service-related costs of providing pension and
retiree medical benefits to its employees. Management considers
non-operating retirement costs to be outside the performance of the
business and believes that presenting operating results excluding
non-operating retirement costs, in addition to the Company’s GAAP
operating results, provides increased transparency and a better
understanding of the underlying trends in the Company’s operating
business performance.

Reconciliations of these non-GAAP financial measures from,
respectively, diluted earnings per share from continuing operations,
operating profit and operating costs, the most directly comparable
GAAP items, as well as details on the components of non-operating
retirement costs, are set out in the tables below.

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